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This blog discusses The Perth Mint's bullion coins and bars, providing information about our latest designs, mintages, sales volumes and sell outs. On a broader front, we share relevant research and opinions for anyone interested in gold and silver bullion investing.

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Looking Beyond The Hype

Topics [ gold investing silver investing ]

IN THE NEWS

Frank Holmes, Chief Executive at U.S. Global Investors has challenged some of the “cognitive dissonances” he sees in the markets. Take this example: “For all the hype over recent tech initial public offerings, did you know that investors have lost more money in Groupon and Facebook than the entire assets in all of the gold funds? Revelations like these are forcing some people to think differently, he says.

Full story: Mineweb

Money is “technology”, according to Byron King. It’s not a natural thing, it’s an “invented tool… an agreed-upon standard”. There are some obvious examples in history where the technology breaks down - like the Soviet Union - which is how he gets round to arguing that the best time-tested technology in such circumstances is precious metal. He’s got silver in mind with the assertion that the “recent silver selloff is due to turn around.”

Full story: The Daily Reckoning

Talking of silver, Eric Sprott has announced that his company has $200 million committed to his self-named Sprott Physical Silver Trust, and the announcement will help the white metal.

Full Story: Mining.com

September silver gained 54 cents, or 2%, to settle at US$28.03 an ounce in New York overnight, with gold futures up another 70 cents to trade at US$1,618.70 an ounce

Full Story: MarketWatch



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Silver To Outperform Gold During QE3

Topics [ gold prices silver prices invest in silver ]

RESEARCH AND ANALYSIS

David Jollie from Mitsui Precious Metals has a research note out looking at QE3 and its likely effect on the prices of gold and silver. He analyses the first two rounds of quantitative easing and notes that silver outperformed gold both times but given “the economic picture is rather different from the periods of QE1 and QE2, … a considerable amount of uncertainty persists”.

Based on his historical analysis, David concludes that QE3 is likely to boost precious metals prices but does not feel that it will be as positive as the previous rounds because

  • each round of QE has shown diminishing returns, and

  • expectations of QE3 are already priced into the market.

Because David finds “little to no evidence that QE3 will generate any additional inflation” he sees “relatively little reason to buy gold today to hedge against this inflation: it may be more attractive to buy into silver or equities in the short term for most consumers and later to switch into gold [at the end of QE3] to cover for longer term inflation” when “experience says it should start to outperform silver once again”.

Noting that “some in the market believe that the monetary authorities are running out of ammunition”, David suggests that gold could benefit “if faith in governments being able to solve this situation dissipates” with resulting concerns that governments may resort to capital controls and other policies which could lead to either hyperinflation or deflation depending on the approach taken.

David’s final observation is that “the impact of QE on asset prices commences before the onset of QE itself”, which is why non-QE statements by the Federal Reserve are “greeted by a sell-off by the optimists who have pre-positioned themselves.”

If you want to read the full research note, please contact David directly in London on +44 20 7489 6767 as distribution is limited to investment professionals and high net worth companies.



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Silver Coin Stack Achieved In Just One Year

Topics [ financial crisis silver stacker Year of the Dragon buy silver ]

VIDEO OF THE DAY

Over the last 12 months this stacker has amassed more than 500oz of silver. Celebrating the stack’s first anniversary, this clip explains the financial reasons he got into silver stacking and how he got “creative” when it came to finding ways to afford more coins. From junk silver to the world most beautiful bullion coins (with an impressive 1 kilo Lunar Dragon centrepiece), it’s an impressive horde that’s targeting 3,000oz of silver by retirement.



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Is Central Bank Buying Good Or Bad For Gold?

Topics [ gold market gold prices silver prices buy gold ]

IN THE NEWS

In 2011 net purchases of gold by central banks amounted to the highest seen since 1964. Matthew Partridge wonders whether this is a signal for the rest of us to get out of gold given central bankers are “never great market timers” and in the words of Erste Group Research’s Ronald-Peter Stoeferle, “tend to be civil servants with an extremely pro-cyclical investment behaviour”. Partridge doesn’t see reason to worry given that the majority of banks presently acquiring gold are in developing economies and generally playing ‘catch-up’. It might be different, however, had they been from developed economies.

Full story: MoneyWeek

Another analyst who’s sees the gold price on its way up to over $US2,000 is Tom Fitzpatrick of Citigroup. He notes that the 2010-2012 gold charts looks strikingly similar to the 2005-2007 charts – and if this continues then the next move will be a huge jump up!

Full story: King World News

Gold futures in New York extended gains to a third session on Friday. The metal saw weekly gains of 2.2% settling at US$1,618 an ounce after France and Germany pledged to support for the euro. Up 5 cents at US$27.50 an ounce, silver rose 0.7% on the week.

Full story: MarketWatch



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Technical Analysts Say Gold Could Advance Strongly

Topics [ gold market gold prices ]

IN THE NEWS

In Is Gold Set to Accelerate Higher? (MarketWatch), Mike Paulenoff suggests that a 5.5-month cycle low has been established and that “Wednesday's thrust above key near-term resistance at $1595-$1601 argues that a new up-leg is on the verge of upside acceleration.” If correct, the gold price “should revisit $1800 quickly, on its way to a new all-time high above $1921.50.”

In Is Gold Ready to Run to All-Time Highs? (The Street), David Banister sees a similar prospect. The current corrective patterns are part of a normal ‘Wave 4’ consolidation that works off the sentiment and overbought nature of that Wave 3 updraft. Following this consolidation, I fully expect gold to continue past the $1,900 per ounce area and run to $2,300 per ounce or higher, in a Wave 5 rally into the summer of 2013.”

On Thursday gold rose for a third day in New York on the prospect of monetary easing after European Central Bank President Mario Draghi pledged to do whatever was necessary to protect the euro zone from collapse.

"Right now gold is testing resistance," Adam Sarhan, chief executive of Sarhan Capital told Reuters. "If we can break above it, we will get another leg higher," 

Gold for August delivery advanced $7, or 0.4%, to settle at US$1,615.10 an ounce on the Comex division of the New York Mercantile Exchange. September silver turned lower midsession, and settled down 2 cents, or 0.1%, at $27.45 an ounce.



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UK Home Insurers Fail To Keep Up With The Price Of Gold

Topics [ bullion coins ]

IN THE NEWS

The increasing value of gold has caught many householders in the UK potentially underinsured, MoneySupermarket has revealed.

Analysis of its quotes showed that specified items of gold on insurance policies more than doubled between Spring 2010 and Spring 2012.

Despite gold having risen 43%, the value of gold listed on insurance policies had not risen in line, it said in the latest MoneySupermarket Monitor newsletter.

A third of UK adults are estimated to have bought items of gold recently, with 16pc buying it as an investment. "Most of these items are likely to be jewellery, however, as investors are repeatedly warned it is unwise to keep their wealth in gold coins or bullion at home,” a British press report said.

Earlier this month an 82-year-old was robbed of seven gold sovereign coins worth almost £7,000 during a daylight burglary at a Plymouth home.

(For more information about secure storage of gold and silver bullion coins and bars at The Perth Mint, click here.)

Overnight... up US$31.90 to US$1,608.10 an ounce, gold futures in New York had their best finish since July 5. Silver futures jumped 66 cents to US$27.47 an ounce.



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